Yes, Allow frame embedding is enabled. You could also try on the Sandbox site demo.moodle.net where you can have admin rights to set it up yourself and double check.
I was able to get it to work eventually, but I had to publish as an LTI tool on a different Moodle site than either the Moodle sandbox or the Mount Orange site. I am wondering if those sites have some sort of setting preventing it from working.
LTI tools from Moodle do appear to work in Schoology (I tried the forum as well as quizes with question types multiple choice and drag and drop into text). However, Schoology only uses LTI v 1.0, so I had to change the link from the v 2.0 .xml that Moodle originally gives you.
Thanks for all your help Mary and John.